How ex-Jumia bosses raised Sh1b for e-commerce start-up

"I think we have to prove it (Kapu's business model) but there are lessons we've taken from our experiences that have informed some of our decisions."

He says that they are now looking at proving profitability at a neighbourhood level, growing fast and expanding beyond Nairobi.

The plan is to be a start-up within as short a time as possible, he said on plans of breaking even. "Start-ups are hard...it sounds like a lot of money ($8 million) but if you want to do big things you have to take a bet."

Chappatte, however, noted the challenge ahead for Kapu which is a play on 'kikapu', meaning basket.

"Jumia hasn't (broken even) yet in the last 10 years, Amazon took 15 years. With a business model like this, you don't break even in a few years. What matters is, can you build a model that's inherently profitable?"

One of the key members of Kapu is Meera Dhanani, the Kapu head of marketing and also a former Jumia executive. She is credited with building Jumia's popular "Black Friday" campaign modelled around the start of the Christmas shopping season in the US in November.

Here, discounted prices and bargains are largely offered.

"It was an easy sell, it's a stellar team very experienced and mission-driven, targeting a larger mass market urban Wanjiku, so the idea that you can have a much bigger impact is what got me into joining Kapu," Dhanani said of joining the start-up.

She had left Jumia and was running her own e-commerce and marketing consulting services before joining Kapu.

Cyrus Onyiego, who had previously served as Jumia Travel managing director and Jumia Food chief operating officer (COO), is now Kapu's COO.

He said they had tapped into the gaps they had seen in the market while working for Jumia and it started with reviewing the e-commerce model to better make it work for ordinary retailers.

Shopping basket

"The biggest impact we have is creating disposable income back into the hands of our consumers," he said adding that customers have saved about Sh40 million in the last year. He notes that part of the reason why the shopping basket is high is due to factors such as production, input and transport costs.

They are playing their part by developing a new model of last-mile distribution.

"Over time others players in the supply chain need to step up what we can do is create scale and demand and can work with players such as manufacturers and suppliers to create efficiency," he said.

On competition, Chappatte says that there is space for many players as "the grocery basket is the single largest market across Africa."

He says that their biggest differentiating factor is that they are a B2C business.

This is compared to, for example, entrenched start-ups such as Twiga Foods which is a business-to-business (B2B) e-commerce platform.

Twiga Foods aims to simplify the supply chain between farmers, and fast-moving consumer goods (FMCG) manufacturers.

From Kapu, customers can primarily buy fresh produce and packaged consumer goods. "A customer can buy three onions or Sh15 worth of goods and have them delivered for free the next day, there's no minimum the way we make that work is that we aggregate delivery where one agent is serving orders for multiple customers," explained Chappatte.

The Kapu agents run businesses such as salons in the neighbourhoods they live in and work in. For them, Kapu is an opportunity to earn extra income and can rake in up to Sh6,000 in a good month.

For example, Damaris Maina, who runs a curtain tailoring business in Gitaru, Kiambu County is a Kapu agent which she fondly refers to as a side hustle for the last four months.

She's able to draw a commission by ordering and picking goods for her customers making up to Sh3,000 a week.

"The more I sell, the more I earn," she said. She says that goods such as flour, sugar and soap top the fast-moving ones in her area.